It is human nature to look hopefully towards the future. Famously and enduringly expressed by Annie belting out “Tomorrow” in musical theatre everywhere is the belief that the future will be better than the past. Unfortunately, when it comes to achieving home ownership, that optimism is getting harder to maintain. The foreclosure crisis hurt many families, and the Great Recession has ushered us into an era of stagnant wages and a widening income gap between the rich and poor. Coming out of the recession, we see rising housing prices without a commensurate rise in incomes. Not only is home ownership less accessible than it was 20 years ago, as I wrote last year, there’s a growing skepticism about the benefits of home ownership.
This is too bad, because research continues to demonstrate that home ownership provides both social and financial benefits, IF buyers are able to keep their homes. For lower income families, this is a big “if”, which is why Cornerstone Partnership supports community home ownership programs that help families achieve stability and build wealth while simultaneously preserving affordability for future generations. We believe that affordable home ownership done right has the power to transform individual lives and communities. “Done right” means not just building units and walking away – it means preparing, protecting, and keeping in touch with buyers, and also strengthening nonprofits to serve as “stewards” of the units over the long term.
In 2011, we received a prestigious federal Social Innovation Fund grant to build the scale and capacity of this type of long-term affordable home ownership program (also called, “shared-equity home ownership”), and to conduct a major evaluation of these models. We launched the Cornerstone Homeownership Innovation Program (CHIP), competitively selected a small group of grantees to receive funding to implement, scale, and share best practices, and commissioned the Urban Institute to conduct a five-year evaluation of the long-term social impact of our grantees’ programs. The study looks to answer the following major research questions:
- Do program buyers access homes that are more affordable than a comparable group of program non-buyers?
- Do program buyers have higher asset holdings than comparable program non-buyers?
- Are program buyers less likely to experience a default or foreclosure than buyers who purchase homes outside of the program?
- Is program participation a transitional step toward market-rate homeownership?
- Do program participants have improved access to quality neighborhoods, schools, services, and amenities relative to nonparticipants?
The Urban Institute has just published a baseline report for this study, the culmination of two years of research design and data collection. The report provides extensive information about the shared equity models used, resale formulas, program challenges and strategies for overcoming those challenges, demographic and financial characteristics of the study participants, and housing costs and affordability. To facilitate data collection and reporting for the study, we provided all CHIP grantees with our HomeKeeper program management software. HomeKeeper not only improves programs’ day to day operations, it also captures data and aggregates it in the National HomeKeeper Data Hub, allowing individual programs to access individualized social impact reports.
We believe that our “new era” calls for more of this type of long-term affordable home ownership program. We are excited to be spearheading a major endeavor to collect data and answer important questions about whether this type of home ownership is truly beneficial and what kind of outcomes it offers families.
For more on shared equity homeownership:
– What If There Were a Step Between Renting and Owning? (Urban Institute)
– Get More, Spend Less: How to Support Sustainable Homeownership (Urban Institute)
– Could This Mortgage Innovation Help You Buy a Home? (Credit.com)